I think there is big opportunity in buying a business that either has huge potential or has existing customer base that is looking for improvement. The amount of money you will personally put down is up to you and what you feel comfortable with. The good news is that you should be able to get a good deal on a lot of different businesses in the current market.

As far as compensation for performance, I would suggest structuring an earn-out plan for the business owner so that they are motivated to grow the business. A business lawyer or M&A laywer should be able to help you with this step. edit

Some of the things to look for in buying a business is the growth potential of the market. Also ask yourself why is this business for sale? Check out who the competition is currently and also who might enter the market in the future.

I would push for some sort of earn out structure regardless of the type of company you are buying. You want to ensure that the current owner has some skin in the game and is not looking just to sell and dash before things get worse. Get creative with the earn out structure and use this as a tool when negotiating the deal. If the seller is reluctant to even negotiate an earn out consider it as a potential red flag. Best of luck. edit

Given the state of the current ecomony it is definitely a buyers market. I would look for a struggling business with an established local brand. Developing Brand Awareness and Value is one of the hardest things to do for a startup. Look for companies that have a solid brand to leverage as you turn the company around. edit

It may be a buyers' market but financing can still be challenging - and what you can finance depends on a lot of factors. Does the business have hard assets that provide solid collateral? Is the business well-established with a good track record of producing cash flow, customers who regularly return, etc.? Or is it new and untested, or creating a new industry space? Is it highly seasonal or cyclical? Are there proprietary one of a kind technologies, or undifferentiated commodities? The circumstances will help influence how much equity you need to put into the business vs. be able to borrow, and personal guarantees of lending commitments are possible. One last factor that I will mention is whether you have established relationships with lenders - if they know and trust you based on past relationships and transactions you are more likely to be able to put something together than if you are a new and unknown prospect.

You also asked about seller financing. If the seller is willing to in some part be your lender - take a note for future payment instead of all cash at closing - that is seller financing. Terms are negotiable just as the whole purchase deal is.

You asked about tying the ultimate value paid to how the business actually performs in the future, often called an earn-out. Some sellers are more open to this than others. They may hesitate where the future performance depends significantly on how well the buyer manages the business - the goal may be to prove out the value of what you bought, but if the buyer feels that the outcome is really depending on how well you as new owner perform vs. how well they performed, they may balk at any earn-out or certainly one of long duration. I have seen earn-outs work better where you buy the business but the former owners stay on as key managers, because then they still have the ability to impact the results. edit

Are you interested in an established Full Service Car wash and Goodyear tire and automotive service center combination. The car wash has been in business and well established for over 30 years. It has a great customer base and is located in an affluent part of town. They currently have one contract with a local car dealership and do very little promoting. With a few new promotions there is potential to increase the number of cars per day and the average dollar amount spent per car. The Goodyear tire and automotive service center is another part of this investment and has also been established for many years. It has 6 bays and is profitable. However this part of the business has not been utilized to its full potential due to a lack of proper management. This business has a very positive potential moving forward.
I am looking for investors who are interested in buying into this opportunity at $50K Increments as I am trying to raise a total of $500K. In return I will pay a 10% APR for a period of 7 years which will give you a 40% return on your money. If you are interested and would like to talk more about it please contact me right away. If you dont have the money but know someone who does I will pay a finders fee for bringing them to me. The finders fee will be $1000 for each $50K your investors invest in this opportunity.
Regards,
Chris Detrick
(805) 215-9188
chris@redhotpottery.com
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You should have the business valued by a Business Valuation company. Nationwide Valuations is great. Ask for Ross. edit

i am looking to buy a c.store/gas station preferably in country side around houston if someone is interested in saling such a business,please contact me at e-mail:-baghbaan50@yahoo.com thanks...ALI. edit

Patrick

I recommend that you work with a business broker. Make sure that the broker is your agent and not the sellers agent. Similar to the real estate market, the business broker is responsible for protecting your interest if they are YOUR agent.

Additionally, they will direct you to seeking the advice of a lawyer and CPA where and when applicable.

I would highly suggest that you clearly understand why the current owner is looking to sell. Many will list other interests or health problems when in fact there may be other problems plaguing the business. You will need to know what these problems are and determine if you want to or can turn them around.

Regarding financing, you will need a good business plan to present to a lender. Depending on the amount you request for financing, the health of the business, the ability to repay the loan, the economic health of the market that you are serving, your experience in this type of business, your credit history and your collateral, the lender will determine how much you will need to come in with.

As Ichiban mentioned above, you may be able to work out a seller carry-back agreement for either the total amount or for the balance that a lender requires. With a seller carry-back, the seller typically carries the note for a shorter period of time with balloon payments both at the beginning and at the end of the note. You may be able to work out a good deal with the seller on a carry-back note if they would incur tax repercussions by taking a total cash payout at closing.

Good luck.

Douglas Dolan
The Solopreneurs Guide
http://thesologuide.com edit

i am looking to buy a little c.store/gas station in countryside, around harris county or montgomery county tx. i wonder if someone can help me to find it. thanks.....ALI edit

I have a apprenticeship program I am offering for the right person, it allows someone to work in my business for 3 months and learn all aspects of the business prior to opening up your own center, we help with all aspects of the opening up your own location, available in several states. edit